Committee Hearing, November 19, 2003

COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING COMMITTEE ON LAW AND GOVERNMENT - - - - Room 696, City Hall Philadelphia, Pennsylvania Wednesday, November 19, 2003 6:50 p.m. - - - - BILL 030562 - An Ordinance amending Title of the Philadelphia Code, entitle "Campaign 10 Contributions and Expenditures... 11 BILL 030710 - An Ordinance amending Title 20-600 of The Philadelphia Code entitled 12 "Standards of Conduct and Ethics"... 13 14 PRESENT: 15 COUNCILMAN DAVID COHEN, Chair 16 COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN W. WILSON GOODE 17 COUNCILMAN JAMES KENNEY COUNCILMAN RICHARD MARIANO 18 COUNCILMAN MICHAEL NUTTER COUNCILMAN ANGEL ORTIZ 19 COUNCILMAN FRANK RIZZO 20 - - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2 I N D E X BILL 030562, 030710 KELLY GREEN, Leaque of Women Voters... 6 KEVIN WILLIAMS, Common Cause.......... 23 7 GEORGE BURRELL, Secretary of External Affairs.................. 31 8 LOUIS COFFEY, CCRA................... 103 9 TERRY GILLEN......................... 114 10 TROY MADRES, Young Involved Phila.... 117 11 LANCE HAVER, Consumer Affairs........ 124 12 3 11/19/03 - LAW - BILLS 030562, 030710

The Committee on Law and Government is now in session. I will ask the clerk to read the bills.

Bill No. 030562, an ordinance amending Title of the 7 Philadelphia Code, entitled "Officers and 8 Employees," by adding a new Chapter entitled 9 "Campaign Contributions and Expenditures," 10 under certain terms and conditions. 11 Bill No. 030710, an ordinance 12 amending Chapter 20-600 of the Philadelphia 13 Code entitled "Standards of Conduct and 14 Ethics" to limit the receipt of contributions 15 by elected City officers or candidates for 16 City offices from individuals or businesses 17 who are applicants for, or recipients of, City 18 contracts or financial assistance, if they 19 have made political contributions within 20 certain timeframes to elected City officers or candidates for City offices, and prohibiting any individuals or businesses from receiving City contracts or financial assistance if they have made contributions to elected City officers or candidates for City offices, all 4 11/19/03 - LAW - BILLS 030562, 030710 under certain terms and conditions.

Thank you very much. Unless there are objections, we're going to consider both bills at the same time. It is the Chairman's conclusion that the bills do not necessarily conflict with each other. Therefore, I see no problem in maintaining one hearing for the two bills. There will, of course, be a separate vote on each bill. Now, the first bill was No. 030562, and that was introduced by Councilman Goode. I'm going to ask each sponsor to summarize briefly the purpose of the bill and then we will call the witnesses. If everybody cooperates, I think we can cover the territory fairly responsibly and fairly quickly. Councilman Goode.

Thank you, Mr. Chairman. I will actually go over the bill as originally proposed and the amendments that are also being proposed. Amendments have been circulated to the Committee. 5 11/19/03 - LAW - BILLS 030562, 030710 This is a bill that actually amends Title of the Philadelphia Code by adding a 4 section that deals specifically with campaign 5 contributions and expenditures. There are 6 several definitions in it, including the 7 definition of "Election Reform Board" which 8 will be established as a nonpartisan, 9 non-governmental entity that will execute and 10 monitor voluntary contracts for campaign 11 expenditure limitations and will include 12 representation of League of Women Voters in 13 Philadelphia and the Committee of 70. 14 With regard to campaign contribution 15 limitations, this bill would limit individual 16 contributions to $1,000 per person, per 17 covered election, per candidate, per year. It 18 would also limit political Committee 19 contributions to $5,000 per candidate, per 20 person, per covered election per year. It would also, in non-covered election years, limit aggregate contributions from political committees to $250,000 for mayoral candidates and to $50,000 for council candidates. Lastly, there are provisions in it 6 11/19/03 - LAW - BILLS 030562, 030710 that say that for candidates, they have to have one bank account and one campaign committee for their office that they are seeking. Beyond that, there are provisions for voluntary limitations on expenditures. They will be done through contract or agreement with the Election Reform Board to be created. In addition to that, the agreement would also contain a provision that the candidates submit to the Election Reform Board their contributions and expenditures to be posted on a website to be developed by the Election Reform Board. And that's the nuts and bolts of the bill. Thank you, Mr. Chairman.

Thank you very much, Councilman Goode. Before Councilman Kenney gets started, let me note the presence of a quorum consisting of to my right Councilman Frank Rizzo. I am David Cohen, Chairman of the Committee. Next to me is Councilman Angel 7 11/19/03 - LAW - BILLS 030562, 030710 Ortiz. And to his left his Councilman Wilson Goode. In back of him is Councilman Jim Kenney. And I see Councilwoman Blackwell and Councilman Mariano and Councilman Nutter. That covers a very substantial part of the total membership of the Committee and is clearly a quorum. Councilman Kenney, may we ask you to give a brief summary of your bill?

Thank you, Mr. Chairman. I also thank you for allowing me to speak. I am not a member of the Committee, but I do appreciate the courtesy allowing me to explain my bill. First, I'd also like to also commend Councilman Goode as a Member of the Committee for his efforts in addressing campaign finance reform. I think it's an issue that, obviously, has been on the minds of many people in the City. And I think that all efforts to bring as much light as possible to this process and to change the way we do business in the City is laudable, and I expect to vote for Councilman Goode's bill when it 8 11/19/03 - LAW - BILLS 030562, 030710 reaches the floor and would like my bill to be on the floor also so we can have a continued discussion about that, about the way in which we do business in the City. My bill basically concentrates more on the issue of contractors, people who do business with the City who have received no-bid contracts or professional service contracts with the City. Initially, my bill was introduced to prohibit any campaign contributions coming from any principals in law firms or other businesses that do business with the City. But I, since then, had input from the Law Department and some other individuals on Council tech staff and have decided to amend the bill and have amendments circulated to Members of the Committee and model this more on the Chicago model which would limit contributions from principals who have contracts with the City to a thousand dollars. And that also includes individuals who are employees of the company whose contributions are reimbursed by the company. 9 11/19/03 - LAW - BILLS 030562, 030710 Certainly, we don't want to stop any employee from contributing to any elected official or candidate, but when that contribution is reimbursed by the company, we think that should be disallowed. Additionally, spouses, members of the immediate family of people who have contracts with the City would also be limited to a thousand dollars. Let me read some for you. "Eligibility for contracts and financial assistance. A, if an individual or a member of such individual's immediate family or life partner, as defined in 9-1106 of the Philadelphia Code, of such individual makes a contribution in excess of a thousand dollars in the aggregate during a calendar year to a candidate for elected office, then the term of that office to which any candidate is elected, the individual should not be eligible to apply for or been awarded any non-competitively bid City or City-related agency contract in excess of $10,000, or to renew any such contract, nor shall said individual be eligible to be a 10 11/19/03 - LAW - BILLS 030562, 030710 subcontractor of any of the aforementioned contracts." Additionally, the individual shall not be eligible to apply for or to receive any financial assistance in excess of $50,000. That includes items like TIFs and other abatements that we have offered to companies in the past. There are also a number of other issues that I will not -- Members of the Committee have the ability to read this clearly. It's a five-page bill. One of the major changes, however, in this bill at the suggestion of the Law Department was that initially we were holding the elected officials and candidates responsible for knowing whether or not an individual had a contract with the City before accepting the campaign contribute. The Law Department, and I agree, thought that was a difficult standard. So now that has been removed and the burden is now on the individual contractor not to make those contributions. So that was one of the major 11 11/19/03 - LAW - BILLS 030562, 030710 changes that the Law Department had asked for. And as the course of the testimony goes on, I'm sure myself and Councilmember Goode will be willing to answer any questions that arise. Thank you, Mr. Chairman.

I'm going to the call the witnesses. And when I call you, identify yourself as being in support or opposed to either or both bills. You can identify the bills by number or you can identify the bills by name of the sponsor. Either way will be clear. Or you can speak in favor of both bills or you can speak opposed to both bills. We want to hear your point of view and any questions you may have. The first two witnesses will be Kelly Green of the Institute of Civic Values and Kevin Williams of Common Cause. Will the two please approach the witness stand? And Kelly Green, will you begin? And I'm going to ask, in view of the hour, that you try to limit your statements to brief 12 11/19/03 - LAW - BILLS 030562, 030710 statements.

I will try. Although, you know I work with Ed Schwartz with the Institute, I'll still keep my comments brief.

And you're also representing the League of Women Voters.

I'm actually not here to represent the Institute; I'm here to represent the League of Women Voters. Good evening, gentlemen. The League of Women Voters supports both bills as steps towards campaign finance reform and election reform in Philadelphia. With regard to Bill No. 030562 we are pleased to have the opportunity to meet with Councilman Goode to provide him with our feedback prior to this hearing. We are especially pleased that our recommendation to create an independent nonpartisan Campaign Finance Review Board was added as an amendment to the bill. This Board will be the body that executes and monitors the voluntary campaign expenditure limit agreements. Candidates will 13 11/19/03 - LAW - BILLS 030562, 030710 report their contributions, and if they sign the agreement, their expenditures to the Campaign Finance Review Board, the League of Women Voters have always believed in full public disclosure of campaign contributions and we believe the Campaign Finance Review Board is the right choice to monitor these records and make them available to the public via posting it on the City's website. We also testify today in support of Councilman Kenney's standards of conduct and ethics, Bill No. 030710, as a step towards campaign finance reform and an approach towards eliminating the pay-to-play system in Philadelphia. Across the country voters are crying out for reforms that will reduce special interest influence and the government decision-making while opening the political process to ordinary citizens. The current system stifles competition and scares away potential businesses, including women and minority businesses in favor of those who are connected 14 11/19/03 - LAW - BILLS 030562, 030710 by the political contributions. Unfortunately, because we currently have no campaign finance reform law, Philadelphians are witnessing the worst case scenario of the pay-to-play system. A federal investigation into contracts allegedly awarded as a thank you for campaign contributions. By working towards eliminating the pay-to-play system, we will restore public confidence in government as an instrument of all people by all people and for all people. In supporting both of these legislative initiatives, the League of Women Voters believes that campaign finance reform will improve the methods of financing political campaigns in order to ensure the public's right to know, combat corruption and undue influence, enable candidates to compete more equitably for public office and promote citizen participation in the political process. We call on City Council to pass a resolution urging the State Legislature to pass campaign finance reform. We believe in 15 11/19/03 - LAW - BILLS 030562, 030710 an open and representative government that permits all voices to be heard so that the office-holders reflect the diversity of the citizens they represent.

Thank you very much. Are there any questions of Kelly Green? (No response.)

Seeing none, before Mr. Williams begins, Councilman Goode, you have amendments to offer to your bill? I think it might be good to summarize the amendments that Councilman Kenney has if you will follow Councilman Goode so that witnesses can address any questions in the amendments as well?

Those amendments were circulated, they were contained in my opening comments, but I will separate what is new. What's new is the creation of Election Reform Board at the request of the League of Women Voters. 16 11/19/03 - LAW - BILLS 030562, 030710 What is also new is that it is not constitutional to do aggregate limits on contributions in non-covered election years, so instead what is constitutional is to do aggregate contribution limits from political committees. So it does contain aggregate limits from what candidates can take from political committees $250,000 for mayoral candidates and $50,000 for City Council candidates in non-covered election years. And lastly, it is just in line with the creation of Election Reform Board. It says that the voluntary expenditures would be done with that board and that there's a further agreement that candidates would give their contributions and expenditure information to the Election Reform Board to be posed on the website to be developed by the Election Reform Board.

Thank you very much, Councilman Goode. Councilman Kenney, do you want to state whatever amendments you may have to your bills. 17 11/19/03 - LAW - BILLS 030562, 030710

I may take the opportunity to explain the amendments, but formally, Councilman Nutter, as a member of the Committee, will be offering them on my behalf. Councilman, did you have something you want to say before --

I actually wanted to query for one second, because I did notice that in the amendments and on Councilman Goode's bill, and I think he did explain it, which seemed to be some prohibition on total aggregate amount and so you made the distinction between the political committees, and I just made a real quick note to myself when I'm looking on your amendment sheet. So under 20-802, No. 3, small "I" and small double "I," I'm taking that to mean while there is a cap on the total amount in a non-election year for how much a candidate could receive in political committee contributions, there would then be no limit on what you could receive from individuals?

That is correct. 18 11/19/03 - LAW - BILLS 030562, 030710 Doing both would be unconstitutional. Doing both, a total aggregate contribution limit would be --

And then the individuals naturally are capped because of other provisions of the bill at what they can contribute at any time?

That is correct. Political committees are still capped at the limit of 5,000 within that aggregate total.

Right. Okay. Thank you. Thank you, Mr. Chairman.

Thank you. Ms. Green, since you didn't have an opportunity to comment, you may comment on the amendments if you choose to or accept them. The amendments will actually be offered during the public meeting of the Committee when the vote is taken. So you can consider these amendments -- although they have not yet been adopted, they undoubtedly would be adopted. So you may discuss them, oppose them or support them or find that they 19 11/19/03 - LAW - BILLS 030562, 030710 are of no concern to you.

We'll discuss them among the board at our next board meeting, which is next week.

Thank you. Councilman Kenney..

Did you want me to do the amendments now, to explain mine now?

Yes. Go ahead.

Thank you very much. There's basically five areas that have experienced amendment. The first, as I said earlier, was the onus is not on the individual elected official or candidate to monitor who has City contracts or not, it is on the contractor who know that they have City work or going after City work and they need to limit themselves. The other change, we're going from zero dollars to a thousand dollars per contractor. The third area is an issue dealing with packs. Let me read the section. "For 20 11/19/03 - LAW - BILLS 030562, 030710 purposes of this section a contribution in excess of $1,000 in the aggregate during a calendar year to any political Committee which during the calendar year in which the contribution is made itself, makes contributions or give financial support in excess of 50 percent of the Committee's total receipts for that calendar year to a particular candidate for elected office shall be considered a contribution to such candidate." This is an effort to -- and again, this is still open for amendment as we move forward to consideration on the calendar. But this is an effort to limit the ability of packs to collect money individually from people and businesses and then to distribute that money to a particular candidate. So if a pack is established to collect or bundle checks, bundle contributions and more than 50 percent of that pack's contribution a particular year is to one candidate, then that pack would be considered -- I'm sorry. It would not be eligible to receive that money. 21 11/19/03 - LAW - BILLS 030562, 030710 Or that the people contributing to that pack would not be eligible for City contract if more than 50 percent of that one individual pack goes to one candidate for either Mayor or City Council or any other City office. And then finally, we changed -- because of the concern over a large company, say, like IBM who had an employee that made a contribution, there would be no way to track that, so we limited that to -- we took away "any employee" and made it "officers, directors or partners" of a company are only allowed to give a thousand dollars. But any reimbursable contribution from another employee would also be considered to trigger the prohibition. For example, if someone's secretary gave a thousand dollars to a particular candidate and that thousand dollars was reimbursed by the company, then that would be considered a contribution that would trigger the prohibition on contracting.

Councilman Kenney, do you have a general conclusion -- do 22 11/19/03 - LAW - BILLS 030562, 030710 you agree or disagree with the characterization of your bill by the press generally, that it's aimed at the pay-to-play concept?

I agree. I think Councilmember Goode's bill addresses campaign finance reform in a very general and good way. And I think that this bill 10 specifically targets the issue of pay-to-play. I do agree with that characterization and the difference in the two bills.

Councilman Goode, did you want to add anything to that or disagree with the general characterization of the two bills?

These two bills amend different sections of the Code. They can mutually exist. While they are connected, I believe in the spirit of what happens in the course of elections and it's appropriate that they are heard at the same time and the testimony is offered at the same time. They can coexist and are in no way mutually exclusive. 23 11/19/03 - LAW - BILLS 030562, 030710

Thank you very much. Ms. Green, any comment? If not, Mr. Williams your statement and comments.

Thank you. Thank you for giving me the opportunity to testify in favor of Councilman Kenney's bill. I'm representing Common Cause PA, a citizens group that works for clean and open government. With regarding Councilman Goode's bill, Common Cause supports contribution expenditure limits, but we have not had the chance to review your bill. Councilman Kenney's bill is an essential first step towards restoring public confidence in city government. The environment in city government right now with pay-to-play receiving so much attention requires direct action like this bill. Government contracts should not be bought through campaign contributions nor should there be appearance that City contracts are for sale nor should there been the perception 24 11/19/03 - LAW - BILLS 030562, 030710 that to obtain a City contract you must make a political contribution. City contracts should not be a device to launder public funds into the war chests of political incumbents. Failure to pass an ordinance correcting this problem would be a mistake because it would send the wrong message to voters, public officials, businesses, contractors tourists and others that pay-to-play is the way that Philadelphia does business. It's a drain on City business and City life. Mayor Street finally came out and said what everyone has known for years: Campaign supporters have, quote, a greater chance of getting business, end quote, from the City. Now more than ever with a federal probe investigating City corruption, we need legislation to deal with pay-to-play. What a coincidence that just prior to these hearings, a developer that gave almost a half million dollars to the Mayor's campaign was asking for a $5 million tax abatement. That's a great return. 25 11/19/03 - LAW - BILLS 030562, 030710 Mayor Street did not invent this system. He is hardly the first Mayor to be aware of it, nor has the problem been limited to Philadelphia. But it is certainly unacceptable to allow pay-to-play to continue here. Statutes limiting or banning pay-to-play are now a normal part of government on the federal, state and municipal levels. According to the Brennan Center at the New York University School of Law, federal efforts to regulate pay-to-play date at least as far back as the 1940s. In 1994, the Securities and Exchange Commission approved Rule G-36 which bans dealers, brokers, municipal securities dealers and their packs from making campaign contributions to issuer officials from two years before through the termination of the securities contract. The rule also includes disclosure requirements. Importantly, the rule was challenged in court and was upheld. On the state level, all states ban bribery. A number of states such as South Carolina, West Virginia, Hawaii, and 11/19/03 - LAW - BILLS 030562, 030710 Pennsylvania's neighbor Ohio have added explicit restrictions against campaign contributions from individuals or entities before and during a government contract. Philadelphia's neighbor, New Jersey, may soon enact similar law. New Jersey is particularly relevant to this bill because towns in New 9 Jersey have already adopted their own 10 pay-to-play restrictions. In other words, local governments nearby have recognized this problem and they have dealt with it. Councilman Kenney has already pointed out this bill is modeled after a similar law in Chicago. Common Cause supports the adoption of measures to protect government integrity like this bill. We were just handed a substantially revised version which we would like to study. But for now, to strengthen it, we recommend that the limit of $1,000 apply in the aggregate over the time period, which I understand has just been done, and over each business and its affiliates. Second, it appears that the revised 27 11/19/03 - LAW - BILLS 030562, 030710 bill now covers only non-competitive contracts, while we believe all City business should be covered. Third, we recommend tighter penalties and enforcement.

And this is addressed more fully in my written testimony. Finally, clean and open government goes beyond a ban on pay-to-play. Campaign finance reform in general is needed here. Only 2 of the 10 largest cities in the United States do not have contribution limits, and Philadelphia is one of them. Several, like New York City and Los Angeles, have expenditure limits and public financing. Some members of this City Council have been leaders in this area as well, and we hope that you will continue your efforts and that we can assist you. Thank you for your attention.

Thank you very much. Any questions? If not, the Chair --

Yes. 28 11/19/03 - LAW - BILLS 030562, 030710

Yes, Councilman Ortiz.

One of the crucial things -- and I was just reading a case in New York in fact where the Majority Leader of City Council, I think it is, Joe Rivera, was just fined by the Board in terms of not reporting certain of the contributions and he was being penalized quite a hefty sum as a fine. And it seems to be that unless you have a Board that can exact some sort of penalty, compliance then is really -- is like George Bush asking the oil companies to regulate themselves and fix the environment. So it's troubling. You need to have a mechanism in which once you put forward a limitation on spending, that if anybody violates that, there is a process and a fine procedure in which people can be held accountable. And we don't have that here because it's totally voluntary, and I think that's one of the flaws that we have in both bills in terms of that. But a step at a time, I would imagine. 29 11/19/03 - LAW - BILLS 030562, 030710

As I mentioned in my written testimony we specifically asked for meaningful penalties, including fines and imprisonment and enforcement provisions. So I completely agree with you.

But for that we need to have some sort of public financing to go along with that.

Common Cause agrees with that as well.

Thanks.

Thank you. Any other questions? (No response.)

If not, Councilman Mariano has to leave and wants to make a short statement indicating his vote on these two bills.

Thank you, Councilman. Councilman Goode's Bill is 562, I'm going to vote in favor of that one, and I'm going to vote against the other one, okay?

Okay. You're voting for the Goode bill and against the 30 11/19/03 - LAW - BILLS 030562, 030710 Kenney bill?

Yes. Thank you.

Thank you. As the Chair stated before, it welcomes the presence and participation of former Councilman George Burrell, currently the Secretary of External Affairs for Mayor Street. Mr. Burrell, come forward. We're happy to see you in your old home.

Thank you, sir. I'm among my old colleagues; I was never in this home. Fortunately, I was able to be downstairs. But thank you very much. It's always a pleasure.

Give your name. I don't know whether you were here when I announced generally you may refer to these bills as the Goode bill and the Kenney bill or by numbers, whichever way you prefer.

Thank you very much, Mr. Chairman.

And for either, against either, or for both or against both. 31 11/19/03 - LAW - BILLS 030562, 030710 Whatever your views are, please state them. And tell us if you're speaking on behalf of the City Administration.

I am speaking on behalf of the Administration, and I think I'm probably going to break up this love fest for a little period of time. Good afternoon. For the record, my name is George Burrell, Secretary of External Affairs. And thank you for the opportunity to testify on behalf of the Administration with respect to Bill 030562 concerning campaign finance reform, I believe that's Councilman Goode's bill, and bill 030710 concerning the relationship between contributions and the award of City contracts, which I believe is Councilman Kenney's bill. As I stated in my testimony in December of 2000, this Administration supports comprehensive, meaningful and effective campaign finance reform. It is impossible not to be conscience of the cynicism in our electorate about the power of money in politics and the overall cost of elections. 32 11/19/03 - LAW - BILLS 030562, 030710 I would add, this Administration also supports a critical look at our Ethics Code with a view to implementing, either by ordinance or executive order, reforms that will strengthen our ethics laws and ensure the continued integrity of city government. Working together, Council and the Mayor need to rise above the need for a short-term, symbolic, political response and work toward real reform. In light of the just completed campaign when the refrain of nepotism, cronyism, and pay-to-play echoed endlessly over the airwaves and in print, the path of least resistance would be to support these bills. But in defense of real and honest reform, we cannot speak in favor of them today. Unfortunately, they are rife with unintended consequences that will do little to advance the administration of government, much less the public's faith in it. The bottom line, these bills fall short of achieving the comprehensive, effective and meaningful reform that will inspire renewed public confidence. 33 11/19/03 - LAW - BILLS 030562, 030710 First, let me address Bill 030562, which would establish campaign contribution limits for candidates for Mayor or City Council, cap the amount of money a candidate may receive during off years, and allow a candidate to pledge to limit total campaign expenditures per election. Earlier, I referred to unintended consequences. Let me give an example. Whether you supported or opposed the Vietnam War, no one can deny the course of history was changed by the presidential candidacy of Eugene McCarthy. I was recently reminded by an article in the Election Law Journal that McCarthy's challenge was funded in large measure by a few wealthy supporters. But under the federal campaign contribution limits that have since been enacted, their support would have been prohibited and his voice stilled. In the end, that is what this campaign finance reform does. It stills some voices and raises the volume on others. We need to be very careful when we do that. 34 11/19/03 - LAW - BILLS 030562, 030710 The continuing saga of campaign finance reform at the federal level highlights the complexity of this issue. Recognizing that limits on direct contributions were ineffective, Congress attempted to implement new reforms through the Bipartisan Campaign Reform Act of 2002, also known as McCain-Feingold. Among other things, that law tries to prevent the use of soft money in federal elections. But where there's a will, there's a way, and the national parties have already found away around many of the new law's limitations. Both parties have dramatically increased their use of state political party organizations, funneling hundreds of millions of dollars to support campaign activities benefited federal candidates that are still permitted by state law but forbidden to be done directly by federal laws. Soft money hasn't gone away, it has just continued to evolve.

More over, many of the soft money prohibitions in McCain-Feingold, ineffective though they may be, have been declared 35 11/19/03 - LAW - BILLS 030562, 030710 unconstitutional by a three-judge federal panel and await review by the United States Supreme Court. With the existence of federal campaign limits, President Bush has already successfully raised more than a hundred million dollars for his reelection campaign and opted out of the voluntary spending cap portion of the federal campaign laws. Democratic presidential candidates have been compelled to follow suit. Campaign finance reform is not an issue that can be resolved by adopting limits on direct contributions to candidates, as this bill seeks to do. Such limits already exist at the federal level and even after McCain-Feingold, we routinely witness multi-million dollar campaigns in Congressional and Senate elections. In fact, one of the frequent complaints from federal elected officials is the time they spend raising money because of the increasing cost of pursuing elected office combined with low contribution limits. The 36 11/19/03 - LAW - BILLS 030562, 030710 legislation before this Committee will not reduce the cost of local elections, but it will increase the time spent by you and others raising the money required to win election or reelection. If the real object is campaign finance reform, then I would encourage this Council to work with Republicans and Democrats here and in Harrisburg, and with respected political watchdogs like the Committee of 70 to tackle this issue in a comprehensive way. Whether we like it or not, real reform must originate at the state level and must address soft dollars, the cost of elections and the role of public financing, as well as contribution limits. We must also focus on how campaigns can be adequately financed so that voters, in fact, get the information required to make informed choices. You cannot have an effective campaign in today's political environment without money. Without money, you cannot inform voters, you cannot change minds, you cannot respond to the twists and turns of 37 11/19/03 - LAW - BILLS 030562, 030710 an election. Not every person can go to community forums or reads newspapers. Most people get their information through mass communication mediums and they are prohibitively expensive. In addition to ignoring several key elements of campaign finance reform, the limits in the proposed legislation are too easy to circumvent. The ultimate result of the bill would not level the playing field or enhance public confidence, but increase the importance in local elections of power brokers who historically raise much more money for candidates than they contribute; independent political committees; state elected officials; and individuals with personal wealth willing to spend it to get elected. Also, the failure or inability to address the issue of soft dollars further strengthens the role of organized parties. Nothing in these bills prohibit a person from contributing an unlimited amount to an independent political committee with the intent to influence local elections. 38 11/19/03 - LAW - BILLS 030562, 030710 Furthermore, the provisions do not prohibit a political committee from spending millions in support of a candidate or slate of candidates so long as the money is spent independently of the candidates and there is no contribution to any candidate of more than $5,000. And I guarantee that candidates will know who gave the money to the independent political committees. These new rules will inevitably encourage the creation of so called independent political committees who can spend unlimited amounts of money influencing local elections. Why is it better for an independent Committee to expend money than a candidate to expend it directly? Why is it better to take away from a candidate the ability to finance his or her campaign directly and everyone be able to know who is contributing to individual candidates?

Even worse, this bill would be a powerful incentive for candidates to evade the contribution limits by collaborating with 39 11/19/03 - LAW - BILLS 030562, 030710 political committees that were independent in appearance only. We have seen this subterfuge at the federal level time and again, and it only compounds the public's cynicism about the electoral process. The bill invites power brokers to dominate the election process in Philadelphia. The hard truth is that candidates will do what is required to build large campaign chests. By making that task harder, we increase the influence of those who have the connections and relationships necessary to fund-raise for candidates. It encourages candidates to build relationships with those individuals so that they will make the calls and collect the checks. I don't think that's really what we're intending to try to achieve. The limits contained in this bill on the amounts that candidates could receive in non-election years exemplifies the problem with reform that is focused exclusively on the local arena. Changing the rules for local candidates produces an unfair advantage for other elected officials who operate under no 40 11/19/03 - LAW - BILLS 030562, 030710 such limitations and can affect local elections here. The voluntary limit on campaign expenditures is very difficult to understand in the absence of any benefit to the candidates from doing so. The $2 million for mayoral campaign essentially means that such a candidate could not put his message on television and mount a meaningful get-out-the-vote drive, in short, could not run a campaign in the modern world. There is a substantial risk identified by the City Solicitor that any foray into campaign finance law by the City could be preempted by state law, perhaps the strongest argument to pursue state-wide reform. I recognize that other municipalities are experimenting with campaign finance reform. But I think it is important to note that the Committee of 70, an independent watchdog organization, having reviewed such efforts in numerous other cities, remains skeptical that contribution 41 11/19/03 - LAW - BILLS 030562, 030710 limits will be effective, mainly because of the possibility of major increases in soft money and the resulting difficulty in identifying pay-to-play politics. In my judgment, the key to campaign finance reform is disclosure and a greater commitment by mass media outlets to reduce the cost to communicate with voters rather than limits that have no ability to reduce the influence and the importance of money in politics. Campaign finance reform is an extraordinarily important issue, but it is ill-suited to local piecemeal change. I do not believe that the cause of campaign finance reform is advanced by Bill 030562. The short term symbolic gesture will turn to frustration with the next more expensive round of local public elections. I'd also like to turn for a brief moment to Bill 030710, which proposes to amend the City's Ethics Code. The Administration emphatically supports a deep, careful and genuine look at how best to strengthen our City's 41-year-old 42 11/19/03 - LAW - BILLS 030562, 030710 ethics law and ensure the continued integrity of city government. But it would be a great mistake to act hastily or in a restrictive way. And I'm going to skip over some of the testimony here because a lot of it has been addressed, I think, in some of what Councilman Kenney has put forward in his proposed amendments. It does not change our lack of support for the bills, but I think it's unnecessary to read through a lot of issues that have perhaps been covered. And there are some issues that I think Councilman Kenney has addressed here that are important or appropriate and it addresses some of the concerns that we had had, but we do believe that the combination campaign limitations and the dealing with vendors have too many ways to get circumvented.

There is a current frenzy about whether the City contracting process is dominated by the awarding of contracts to friends at the expense of more qualified businesses. This is inaccurate, and I think 43 11/19/03 - LAW - BILLS 030562, 030710 most people in this room know that it is not true. Outside of legal and financing appointments, and the financing appointments are done specific -- which are a number of the no-bid contracts that people are concerned -- are given to people who are covered by G-37 and prohibited from making political contributions. And yet, people still suggest that those selections are made in a political way. Even though they're no-bid contracts, none of those people can give, under G-37, more than $250 to any candidate who can award them business. Yet people still talk about the influence that the underwriting community has in public affairs. But outside the legal and financing appointments, virtually all non-bid contracts are awarded based on their merits after a competitive process that focuses on cost and quality. None of us can deny that friends and supporters of the Mayor, members of this City Council, and other elected officials compete for many of those contracts. What you also know is that in each case, the unsuccessful 44 11/19/03 - LAW - BILLS 030562, 030710 competitors also consist of friends and supporters of those elected officials. It is naive and unfair to the integrity of the people in government who make recommendations and decisions that political support is the deciding factor on public policy decisions. I can assure you that over the last four years, contracts have gone often to highly qualified businesses associated with the other side of the aisle. Most financial supporters of the Mayor have not received the business they competed for, and I can assure you that most of the frustrations that those people articulate show up in my office. I am proud to say that one of the hallmarks of this Administration's contracting process has been its integrity. And nothing I have heard in recent months changes that view for me, nor will the Mayor success in the recent election change our view that all contracts be awarded to qualified vendors who include significant MBE and WBE participation at the lowest cost to the City. In conclusion, this Administration 45 11/19/03 - LAW - BILLS 030562, 030710 stands ready to work with Council to evaluate and develop reforms to the City's Ethics Code. Bill 030710, however, we think, is not the solution. Thank you all very much.

Thank you, Mr. Burrell. I think it ought to be recorded -- is this the statement of the Mayor on the subject?

This is the statement of the Administration, yes, Councilman Cohen.

Thank you. Questions from members? Councilman Goode.

Thank you, Mr. Chairman. Good evening, Mr. Burrell.

Good evening.

Let me start by saying, it's obvious from your references to what needs to be done at the state and federal level that the Administration either refuses or cannot see this within a strictly local context; is that correct? 46 11/19/03 - LAW - BILLS 030562, 030710

The Administration does not believe that you can successfully achieve campaign finance reform and take the influence of money out of politics simply by the passage of local legislation.

You can achieve perfect reform on a local level. I'm sure you can achieve perfect reform, period, even on a state and federal level. But are there reforms that can be achieved on a local level?

It is my opinion, and I think the opinion of the Administration, that we will not achieve reform by the adoption of these bills.

Perfect reform or any reform?

No, we won't achieve reform as long as an independent political committee or a state elected official or someone outside of the City of Philadelphia not controlled or limited by the limitations controlled in this limitation can spend millions of dollars to influence the outcome of a Mayor's race or a Council race or any 47 11/19/03 - LAW - BILLS 030562, 030710 other local race, you cannot achieve reform.

So briefly, yes or no, there's no level of reform that can be achieved through local legislation alone?

You cannot achieve reform by local legislation.

There's no level of reform that can be achieved through local legislation?

The public is not really looking for the level -- what we have seen, the federal government --

I have other questions. It's just whether you believe any level of reform can be achieved through local legislation alone?

I do not believe that reform can be achieved through local legislation independent of state participation.

Since your testimony of December of 2000, what have you done?

I get up and go to 48 11/19/03 - LAW - BILLS 030562, 030710 work every day.

What have you done on this issue?

We have said -- I said in December of 2000, and I'll say again today, that we stand perfectly prepared to work with this Council, to work with the Governor, to work with the general assembly to try to fashion campaign finance reform that will work. But as long as the state is not prepared to participate in those discussions, we do not believe that you can complete that process.

Part of the state lobbying efforts and connections intergovernmentally would be made by you. My question is, what are you or anyone else in the Administration prepared to do that you obviously didn't do since December of 2000? What are you prepared to do now specifically?

This Administration's priorities are to improve the quality of life for people in this City, to get drugs off the streets, to improve neighborhoods -- 49 11/19/03 - LAW - BILLS 030562, 030710

So you haven't done anything on this issue?

We have not established campaign financing reform as a No. 6 1 priority of this Administration. But we have always said that we are prepared to participate in real discussions about reform in solving this problem.

Okay. You also mischaracterized my legislation as limiting mayoral campaigns to $2 million in expenditures, all of that is a voluntarily limit. It is actually $2 million -- let me put the question this way. How much does it cost to win a Mayor's race.

I don't know. Two candidates just spent $25 million to run a Mayor's race in a general election. And that $25 million is almost twice as much that was spent four years ago to win a general election in the City of Philadelphia. I guarantee you, though, that you cannot win -- and in 1999 John White, Dwight Evans, Happy Fernandez, all spent $2 million to run for the office of 50 11/19/03 - LAW - BILLS 030562, 030710 Mayor in the Democratic Primary and came nowhere close to getting the percentage of the vote that made them competitive.

But did they lose because of the money?

I think if you don't have the resources to communicate on television, communicate by mass media, put together a field operation to do an election day operation, which is expensive in today's politics, that, yes, they loss because they didn't have the resources to do what they needed to do. It wasn't simply their message, they didn't have the resources to do what they needed to do.

Since the Administration is not taking on this issue as a priority or done any significant study of it, is that your personal opinion in terms of what it takes to win a Mayor's race? Because I don't know what amount of money --

In 1991 I ran for Mayor. I think I know a little bit about what it takes to run for Mayor in this City. I 51 11/19/03 - LAW - BILL 030562, 030710 think I know a little bit about what it takes to win. In 1999 I worked in the Mayor's race, both in the primary and in the general election. I've been involved in the politics of this City, short of the period of time that I worked in this Street Administration, I've been involved in politics for almost years. 9 I think I know a little bit about what it 10 takes to win a Mayor's race. 11

Let me ask a 12 question. Is there an amount that it takes? 13

Today, it took $12 14 million for the Mayor to get reelected Mayor 15 of the City of Philadelphia. And I guarantee 16 you, he spent every one of those $12 million. 17

I will for the 18 sake of not even getting into that discussion 19 of how and why he won and whether money had 20 anything to do with it or the expenditure had anything to do with it, I'll move on to Council races and move away from the Mayor's race. Does your critique of the bill 25 extend beyond the Mayor's race and what it 52 11/19/03 - LAW - BILL 030562, 030710 takes, the amount of money it takes to win a Mayor's race to Council races? Do you believe there's an amount of money that it takes to win a Council race?

I believe that, unfortunately, the devining issue in public elections in America, not just in Philadelphia, but in America, is money. And I think if you look at the numbers in the Council races and you look at the number of votes that people get, you would think that five Democratic Councilmembers who are running at-large would all get the same number of votes. You would think. They don't. I don't know. Certainly money has something to do with that differential.

What does it have to do with it? I mean, I'm asking -- the Administration has not studied the issue. You say you are qualified as someone being involved in politics. I'm strictly asking can you directly tell me what connection there is between expenditure and votes?

Politics is about 53 11/19/03 - LAW - BILL 030562, 030710 communicating a message. And you communicate that message by mail, you communicate that message on television, you communicate that message on radio, you communicate that message in newspapers. All of those things -- now, there are other ways you communicate that message, but all of those communications you pay for. You put an election effort together on election day. You pay for it. There is no 11 volunteer election day effort. Now, we can spend all night long talking about who does what, but we all know we wouldn't be here tonight if we all didn't know that money was an important influence in public affairs and in politics and in electoral politics. Now, we can go back and forth with that for a long time, but it's a fact. I didn't do it; you didn't do it.

You're offering anecdotally. I don't believe it's evidence to that fact. I am someone who has actually run in five different elections. I've won four of the five. I've beaten over 60 candidates. Still to date over five elections, I've spent 54 11/19/03 - LAW - BILL 030562, 030710 less than $200,000. So obviously, money is not the driving force, not the only driving force.

There is money that is being spent -- there is a lot of money that was spent by the Mayor in this most recently completed elections that supported the election of incumbent candidates. You're one of those. Your name was probably on every single ballot that the Mayor sent anywhere in this City. Anything that we did that included --

The Mayor -- you're talking about in the general election or primary election?

The Mayor's campaign.

Councilman Goode, could I interrupt and permit other Councilmembers to come in. You will be able to get the floor again.

Councilman Cohen, this is fun. I could do this all night. I've got nowhere to go. Except to have dinner with David Heinman (ph). 55 11/19/03 - LAW - BILL 030562, 030710

I think you both need second breaths.

I'll be very brief.

Okay.

Are you referring to a general election or a primary election?

The Mayor gives money to the Democratic City Committee. The Democratic City Committee produces ballots. They pay an election day force to be on the street on election day. On those ballots are the names of all the incumbent Democratic Councilmembers or the endorsed.

Most of them.

Or the endorsed Councilmembers. That money helps people get elected.

I actually believe I paid $15,000 for that, for my name to be on it.

Well, if you think that $15,000 and the money that they collect from the candidates pays the Democratic City 56 11/19/03 - LAW - BILL 030562, 030710 Committee for what they need to do, then they're collecting --

I believe that my payment of $15,000 got my name on the ballot.

And I paid $15,000 and they put my name off a lot of ballots. The same Democratic City Committee, by the way.

I ran for City at-large. I ran for Mayor. I know a little bit about what it takes to get elected. Money is an important part of politics.

I would just briefly end by saying this. We can disagree on this issue, but it has nothing to do with the legislation before us. I mean, to actually say that campaigns are driven strictly by money and the unlimited nature of the ability to spend, I just believe is what these bills are about and why we have to attack this issue locally. And this is about reform. Not only have you not said anything that the Administration has done over the four years toward that reform, but you actually are 57 11/19/03 - LAW - BILL 030562, 030710 saying that the game is about money. And that's why there's a need to do something locally.

Don't put words in my mouth. That's not what I said.

That's what you said.

That is not what I said. Don't put words in my mouth. What I have said --

You said that the defining issue in American elections is money.

I said the divining issue in American politics today is money. If it weren't, we wouldn't have all of the national discussion about campaign finance reform and we wouldn't have it over years 19 when we tried and they failed to achieve 20 success at it. What I have said is that we cannot achieve reform and get the influence of money as it is currently defined out of politics without a comprehensive statewide campaign finance reform. I have said that we stand 58 11/19/03 - LAW - BILL 030562, 030710 prepared to participate in those discussions. We have not gone about the business of being the catalyst for them. I have not said that we don't understand this issue. I have not said that we haven't looked at this issue. I wouldn't be able to testify today or to talk about it if we hadn't looked at the issue and don't understand. I understand campaign finance reform. I simply do not agree with your attempt to achieve reform.

You did not speak to it on a local level. And my bill only relates to Mayor and Council races. And I do believe -- you can correct me if I'm wrong. I do believe that you said in order to be elected Mayor or to City Council it takes money.

Let me try this one more time. I'm usually pretty good with the King's English, but I'll try it one more time. What I have said is if you -- and I'm going to change my words. So if you go back, it won't be exactly, but it will be the same point. Councilman Kenney and I had this 59 11/19/03 - LAW - BILL 030562, 030710 discussion the other day. It will be the same. If you pass a bill that says you must limit contributions to $1,000 and $5,000 by individuals and/or political committees, all you do is increase the effort that it takes for people to raise $12 million. There's still going to be $12 million spent in the next Mayor's race. And as long as you leave independent committees out there and you leave state elected officials out there who have the ability to raise the money and spend it on local elections, you are not going to change the public's sense that money is the devining issue in politics and that it influences the outcomes. That's what I've said. But I haven't said anything about you can't pass a bill locally. I said it wouldn't have the effect that you think it will.

(Inaudible, microphone not on.)

I said "devining," d-i-v-i-n-e, not "defining."

How does the Administration's words comport with its 60 11/19/03 - LAW - BILL 030562, 030710 actions? Today we had a hearing before this one, and the morning Inquirer pointed out that the Mayor received a contribution from the man who was here, the Goldenberg Group, asking for millions of dollars from City Council today. Late in October of this year, he made a contribution to the Mayor of 160 or $165,000. Tell me how that gives confidence to the American people that decisions are being made based on merit rather than on money and political influence?

Because this is the same gentleman who had contributed to the Mayor probably in 1999 when he ran for public office and when he acquired the building and wanted to tear it down. This is the same Mayor who got right in his face and said, "We're not tearing down the Boyd Theater. It is a historically preserved site. We want to protect it. We want to preserve it." And he caused that developer, despite his contribution to him, to back down from their intent to want to tear it down. 61 11/19/03 - LAW - BILL 030562, 030710 I think people are smart enough to look at the judgments that people exercise. And the fact that that developer was here asking for a TIF has no connection, has no 6 connection to the fact that he gave money to the Mayor.

You know, maybe in the book on fairy tales that would be believed, but in today's real world we know that a return of 5 million on an investment of just under a half million and a number of years for support for the Mayor was a tremendous investment. The return on that investment was much better than you could have gotten when wall street was booming. He got a 10 to 1 investment.

I don't --

Aren't, Mr. Burrell, in fact investments in the form of campaign contributions just about the best paying investment in America? And isn't it most costly to citizens?

Councilman, I said this in my testimony. That -- I didn't say 62 11/19/03 - LAW - BILL 030562, 030710 this exactly in my testimony, but let me embellish it a little bit. I've said in the past that lots of the decisions in our Administration about discretionary contracts get made in my office. And I guarantee you that every time we make one of those decisions, we make one ingrate because they never get as much money as they want and we make four or five enemies because everybody that we turn down is full of people who are our friends and friends of other elected officials in the marketplace. And I believe -- and I'm not being flippant about what I'm about to say. But this issue, we just completed a campaign in this City where this issue was the No. 1 issue by the opposition to the Mayor. Fifty-eight percent of the people in this City or more said, "We're going to reelect this Mayor." I don't think they believe that pay-to-play is the order of the business in the John Street Administration. I do not believe that's what the people in this City believe, because if they believed it, if they believed it, there 63 11/19/03 - LAW - BILL 030562, 030710 was enough of an attempt over the last several months to say to you, "You have an alternative to this pay-to-play system that is corrupting this government." I do not believe that the people of the City of Philadelphia believe that this Mayor or this Administration operates in a corrupt way or makes decisions based upon the money that people give to them because you simply cannot do it. And we all in this room, we all really know that you can't do it that way. You simply can't do it that way because every time there is a competitive bid, there are friends on every team.

Councilman Nutter.

Thank you, Mr. Chairman. I'll be brief. Secretary Burrell, I was intrigued by the exchange between you and Councilman Goode. And I certainly don't want to mischaracterize or place any words anywhere, but did I take from both your written statement and the exchange between yourself 64 11/19/03 - LAW - BILL 030562, 030710 and Councilman Goode that the basic position here is that local campaign reform efforts, whatever they may be, will have no impact on the amount of campaign dollars spent?

Oh, absolutely. Absolutely. And I think if you look --

So you think even with any of these bills, if the -- I don't want to say going rate. But if the cost to be competitive by, I think, all published accounts in the last mayoral election and in the general was 12 and a half a piece or aggregate of 25 regardless of what, that even with the limits that the candidates will still raise that amount of money?

Councilman Nutter, Arlen Specter will spend probably upwards of $20 million to run in the United States Senate race in the Commonwealth of Pennsylvania next year. He has to raise his money subject to limits of $1,000 and $5,000.

I understand that, but --

It will not limit the 65 11/19/03 - LAW - BILL 030562, 030710 amounts of money.

I understand that. But when you're one of a hundred senators in the United States of America, I mean, he probably has a few fund-raisers in California or Florida or a variety of other places across the country or you have major national interest that weigh in. Maybe the mayoral candidates had some fund-raisers in different places, but just logistically or by the standards that we all know I guess there is some notion of the usual suspects that get involved in this. If there are limits on what individuals or packs can contribute, I mean, it seems to me your next step is you have to widen your base. You have to go after more people to raise that amount of money. I mean, I guess the question is -- I mean, there's only hours in a day. We are a local 21 government. Even the office of Mayor, and it 22 is significant and you can attract certainly 23 some national people to be involved but, I 24 mean, again, I'm just taking away -- you're saying that there will be no real impact on 66 11/19/03 - LAW - BILL 030562, 030710 the amount spent even if you significantly drop the amount that individuals and packs can give?

I think I'll give you two answers to that. I think the answer to that is yes. Number 1 because, you know, there are fund-raisers out there. There are fund-raisers out there. It's not just the candidate who have to make those calls. There are fund-raisers out there and you're going -- you'll just produce more fund-raisers and the guy will start raising more money -- he'll make a hundred calls instead of making 10 calls. And as long as independent political committees defer the cost of elections on behalf of a candidate they favor so an independent political committee spends $2 million and you spend 8. You still get to 10.

Let me just ask a couple questions about your testimony. On the first page, the testimony reads, that last paragraph, "I would add this Administration also supports a critical look at our Ethics 67 11/19/03 - LAW - BILL 030562, 030710 Code with a view to implementing either by ordinance or executive order reforms that will strengthen our ethics laws and ensure the continued integrity of city government. What are some examples of provisions that the Administration would support either by ordinance or executive order to strengthen the ethics laws to ensure the continued integrity of city government? What kinds of things are we talking about?

I am not prepared today, Councilman, to offer you a number of things that the Administration is prepared to support and recommend. I have not had that discussion with the Mayor and I don't want to speak independently on that subject.

Okay, but, I mean, Mr. Burrell -- and I'm not being flip either, I mean, it is your testimony. Your testimony is, "We're prepared to support a variety of things." I mean, a reasonable person would then say, "Well, what?" Because I'm assuming that you thought about it before the testimony was put 68 11/19/03 - LAW - BILL 030562, 030710 together to make that statement. I mean, it opens kind of a big wide door.

And it opens a door that says we're prepared to sit down and we would prepare, in fact, for those discussions. If those discussions were to be held, we would come to them with ideas and with thoughts and with recommendations about how to resolve these issue.

Well, what kinds of things do you think we should be working on?

I think that we have to take a hard look at not creating form over substance. We have vendors out there who do, in fact, compete for business with the City, who do, in fact, contribute in political elections. And I think we have to honestly figure out how we can protect the interest of the public that people are not unfairly -- Councilman, one of the differences that I have with many people, I start from the premise that we don't make decisions based upon who gave money to the Administration or not. And 69 11/19/03 - LAW - BILL 030562, 030710 I think --

I know that's your position.

And I think that we'd be prepared to come and discuss how we can achieve the objective in a very real way, but I believe, as I said throughout this testimony, that I do not believe that it can be achieved unless we have all the players at the table and we have comprehensive reform.

I hear what you're saying. I just want to make sure that I'm -- I'm not try to ask the narrower question. That statement says to me, at least, you might be looking at the variety of provisions either by ordinance or executive order that will create these reforms to strengthen our ethics laws and ensure the continued integrity of city government. Are you only talking about with regard to campaign finance and campaign contributions, or are there other things that we should be doing in the government that address that particular statement? 70 11/19/03 - LAW - BILL 030562, 030710

I think that today we're talking about campaign finance reform. I think ethics laws are something that should be on the radar screen for people on a recurring basis. But today we're really talking about campaign finance reform.

And when you say that the ethics laws should be on the radar screen for continued review, again, are there any kinds of things that you could share with us where you would recommend that some changes be made?

Not today.

Does the Administration have any particular view on the issue of -- there's actually a bill sitting on the Council Calendar and since we're in this conversation talking about ethics laws with regard to the issue of nepotism, is there any view by the Administration on that particular issue?

I am not prepared to articulate the Administration's view on the nepotism bill today. 71 11/19/03 - LAW - BILL 030562, 030710

Okay. All right. On , and it is throughout the testimony because specifically you talk about you'd encourage this Council to work with Democrats and Republicans here and in Harrisburg and with others this is very much similar to Councilman Goode's question. I'd like to take a slightly different angle at it. I mean -- and I understand what you said earlier about the Administration's priorities in terms of issues that you've been working on specifically with Harrisburg but, I mean, in the now, in short of, I guess, a month, four years, has there ever been any discussion with any state legislator about the issue of campaign finance reform or the development of a bill to address that particular issue or anyone working anywhere, either the Administration itself, lobbyists or people that work on a variety of legislative matters, I mean, is there anybody in the Administration on or behalf of the Administration who has ever worked on a proposed piece of legislator 72 11/19/03 - LAW - BILL 030562, 030710 to address this particular issue at the state level?

Councilman, I don't want to give a specific response to that because then I'll be forced to try to recall specific conversations that I and/or others had. But I can say from my own experience have not gotten any sense that there are people in Harrisburg who are today, people in Harrisburg who represent the City of Philadelphia who are today prepared to put campaign finance reform at the top of their agenda. I've been in discussions about it. We have not discussed specific legislation. We have talked about the concept.

Isn't it a fact, Councilman Burrell or Secretary Burrell, that every reason given by the Mayor supports the common belief the Mayor has not the least interest in campaign finance reform because he always says pay-to-play is how it is in Philadelphia. He said that's it. And the Mayor's action certainly support is concept that that's there forever and nothing can be 73 11/19/03 - LAW - BILLS 030562, 030710 done. And isn't that a very expensive method for government to operate on, because, obviously, the taxpayer is making the campaign contributions?

Councilman, as I said in my testimony, the easiest thing for this Administration to do today would be to come and to testify in favor of campaign finance reform. The Mayor can't run for Mayor for Philadelphia again. He simply can't do it. The Charter prohibits it. He's done. So that the comments that he makes and we make on this subject, I think, ring true and will ring true to the people of this City because we have no 16 self interest to protect in terms of another election.

Well, are there any other questions by Councilmembers?

Yes, just let me finish my last one.

Yes, go ahead. Sorry for the interruption.

That's okay, Mr. Chairman. 74 11/19/03 - LAW - BILLS 030562, 030710 So, Secretary Burrell, on this particular issue, I think what I'm hearing is if there were a person in Harrisburg working on this particular issue, the City Administration would join with that individual in Harrisburg to work on this problem from a state level; is that what you're saying?

The City -- and I think I said it. I just would expand that a little. The City would be fully prepared to work with representatives of the General Assembly, the Governor and City Council to discuss and to work out -- we could be fully supportive of a campaign finance reform bill 16 that works and a campaign reform process in the Commonwealth of Pennsylvania that allows us to really change the way elections are conducted.

Has the Administration ever had any discussions with representative Greg Vitali about his efforts to have campaign finance reform legislation in Harrisburg? I think he's tried on a number of sessions or however they conduct themselves. 75 11/19/03 - LAW - BILLS 030562, 030710

I have not. To my knowledge we have not. I would probably know if we did. So I have not.

Isn't to some extent in conflict with your last statement? I mean, there is someone working on something up there and you said you'd join --

I think I said representatives from the City of Philadelphia in my earlier comment. And in my broader comment, I said we're prepared to work --

You said the General Assembly.

Representatives of the General Assembly, the Governor, City Council and the City Administration. We will participate in those discussions. To my knowledge, Representative Vitali has never invited us to a discussion to participate at any given point or time. And I am unaware his efforts.

Just lastly, I guess in recent times for a variety of purposes, the term "road map" has been used to 76 11/19/03 - LAW - BILLS 030562, 030710 try to lay something out. So how, in your view, how would it need to work? Someone either generally from the General Assembly or someone within the Philly delegation would move something forward and then would have to organize the City, the City Council, the Governor and other people in Harrisburg to make something happen, but the City will not initiate anything, it will just participate if it's requested?

We have not and are not going to take the lead right now today on campaign finance reform. We will participate --

Why is that?

-- in discussions. Because the priorities of the Mayor as he's going into his second term are going to be to continue to improve the quality of life in the City of Philadelphia and continue to work on Safe Streets, continue to work NTI, to continue to try to improve public education in the City of Philadelphia. Those are going to BE our priorities as we begin the second term 77 11/19/03 - LAW - BILLS 030562, 030710 of this Administration. If someone else has a priority of campaign finance reform and they want our support and our participation in that effort and in those discussions, we're ready, willing, and able to do it. But we're not prepared to take the leadership on that issue today.

Because it would interfere with your other objectives either here in the City or in Harrisburg? Take away too much time?

Even though we think it's important, we think it is not on top of the list of the priorities of this Administration.

Okay. All right. Thank you.

Mr. Burrell, you said that the election results are more or less a validation of the way business has been done and, therefore, no change is needed. You see that the way business is done in Philadelphia needs no reform, the status quo 78 11/19/03 - LAW - BILLS 030562, 030710 should be maintained, business as usual, there is no need to bring new ways of either in terms of the contracting, campaign financing reform, how contributions are done down the line -- and the cynicism that you referred to that has been created about surrounding elections and elected leaders, the election results validate the status quo.

That's not what I said. Let me be clear in what I said. I said that the issue of pay-to-play was debated thoroughly in this most recently completed campaign, that the people of the City of Philadelphia had the opportunity to evaluate and to determine whether the pay-to-play culture, as was suggested by the opposition and opponents to the Mayor in that campaign, was reason enough to take him out of office, that 58 percent of the people in this City considered that issue among all the other issues and said, "We support this Mayor." I did not say and what I've said here today is not that we don't support campaign finance reform. What I said today is 79 11/19/03 - LAW - BILLS 030562, 030710 that campaign finance reform, and I think that we owe it to the people of this City that if we're going to do it, that we don't do it symbolically, we do it in a way in which they are going to see change.

Well, I'm not interested in symbols.

I don't believe that what we are proposing today is going to cause the people of this City to see change.

But I'm really intrigued because you said 58 percent of the people in essence validated the way business is done in Philadelphia, that the issue was put to them and they decided that pay-to-play, as defined, was really turned down and the people -- repudiated by the people that is no 19 such thing and that the way business is done in Philadelphia is fine and dandy and we should just go on as we have been doing. And that was approved by 58 percent of the people because you say that that was the issue that was put forward, so no reform is needed.

I'm having real 80 11/19/03 - LAW - BILLS 030562, 030710 trouble with my English today. But I don't think I've said anything in this testimony that would suggest that reform is not necessary. What I have said is that the proposals --

Well, we tried to talk reform here.

What I have said is that the proposals that are before us, we are suggesting by the work that we are doing today, we are saying to the people of Philadelphia that you are going to see real change in the way elections are conducted in the City of Philadelphia as a result of what we do here. I do not -- I believe as long as the state is not at that table and you don't have comprehensive reform, that you can't achieve that objective, that there are too many ways to get around it. I did not say that 58 percent of the people fully accept the way everything is done in the City of Philadelphia. What I said is that that was a preeminent issue in the most recently completed campaign. People took it into 81 11/19/03 - LAW - BILLS 030562, 030710 consideration. I do not believe that people believe that the way the Mayor conducts the business of this City and makes decisions on behalf of the people of this City is corrupt. I think that is what the people decided, not that it's perfect, not that we can't make it better, not that we can't improve it. And that's the responsibility of all of us.

How would you characterize the widespread federal investigation that's taking place in the City of Philadelphia that has really put a cloud about how government functions in this City? And I do not believe that that is a conspiracy by a right wing cabal if it is not about the way we do business in the City of Philadelphia and reform is needed and the way campaigns are run.

You know, to draw a connection between the corruption investigation and campaigns in Philadelphia, I don't quite get that. I don't know how you get to that point. There seems to be a coincidence of finding. 82 11/19/03 - LAW - BILLS 030562, 030710

I'm trying to get -- because you just reject any sort of action to bring some sort of reform and you sort of say it is insignificant, the two bills that are in front of us, that they have no meaning, they're both symbolic. Well, at times, symbolism has an impact and has a role to play in the way reform and change is brought about.

You can look at the federal system, and people are tired of symbolism. They've reformed the federal system three or four times over the last 14 years, and they still haven't gotten money out 15 of politics. That doesn't say that we can't 16 make changes and we shouldn't make changes. 17 I'm simply saying that the legislation before 18 us today, I don't think achieves it. If 19 people think that symbolism is important, if 20 people think this is a first step, I don't get there. But people are entitled -- that's a reasonable conclusion to reach. But I think people want change, and I think they want to see -- they're going to believe that if we do what is being proposed here that they're going 83 11/19/03 - LAW - BILLS 030562, 030710 to see change in the way elections are conducted in Philadelphia. I don't believe that's true.

Four years ago, you testified before this Council and we waited for some way, some signal, some direction from you and the Administration in terms of campaign finance reform, and none was forthcoming. And right now at the state house, Mr. Vitali has had a good bill because we consulted him when we started this whole process. And you say that there's need to communicate with those individuals because they're not from Philadelphia. Again, what I get from you is that business as usual is fine and dandy and we don't need to change the way business is done.

That's not what I've said. If that's what you want to construe, you have a right to construe it that way. That's not what I've said. I've not said business as usual. And when I testified here the last time on this legislation, I in large measure said what I said today, that we stand 84 11/19/03 - LAW - BILLS 030562, 030710 ready to participate but it's not a priority for the Administration that we were going to take the leadership on. If Representative Vitali had reached out to us to have some discussion or you had reached out to us to have discussion when we wanted to -- when we went through this the last time, I sat in a meeting with you and Councilman Kenney and the Mayor in which we discussed this issue and laid out our issues and our concerns. We're prepared to have those discussions again. We simply do not believe that the legislation before us gets us where we need to go.

When was the last time there was open discussion on anything between the Council and the Mayor?

On the issue of campaign finance reform, the Mayor, Councilman Kenney, Councilman Ortiz, myself and the Mayor met to discuss the bills before we testified before. We didn't reach a meeting of the minds, but we met and we discussed their campaign finance reform bills in some depth in the Mayor's office. 85 11/19/03 - LAW - BILLS 030562, 030710

The Mayor talks about saving money. Isn't campaign finance very costly to the government? Is campaign finance the only expenditure a businessman makes that's not recovered by him?

I'm sorry, I --

Because as I indicated before, the recovery rate is enormous. It may be as high as to 1, as in 12 the Goldenberg Group. It could be much higher 13 in other circumstances. So obviously, the 14 businessman has to recover when he bids and 15 sells things to the City he has to consider 16 what the costs of his contributions are. And 17 when a businessman writes a check for $165,000 18 in the mayoral race, you've got to be kidding 19 if you think that that businessman doesn't 20 expect to recover that money many times over. It's as plain as day. Some of it would be, not only cleaner, it would eliminate many forms of corruption, but it would be most economical for the City on every bid it puts out or every offer that it sends out to get 86 11/19/03 - LAW - BILLS 030562, 030710 work done if we eliminated these contributions and if, for example, we had as these laws move in the direction of making it very difficult for anybody to continue that pay-to-play game. It's very expensive. Taxpayers can't afford it. Just on the money end and from the ethical end, it's a crime that it continues.

Councilman, I said in my testimony, this Administration makes every one of its decisions based upon the quality of the people and the competence of the people who are competing for contracts and on a cost-effective basis to the City of Philadelphia. We do not make decisions based upon the size or the magnitude of political contributions. You know, one of the interesting things is when you read about these issues -- I was looking at some of the limits in the legislation. There are $1,000 limits there. $10,000 limits and I was bemused by using some of the stories that have been written on pay-to-play issues where someone has one a contract who gave $750 to a political person and that connection is drawn 87 11/19/03 - LAW - BILLS 030562, 030710 between pay-to-play. If that's the rule, then the limits in the current legislation don't even eliminate the pay-to-play question. It's a little bit out of control.

Well, it would be funny if it weren't so tragic and so costly and create such a loss of public confidence in government at a time when the opposite needs to be done.

And I'm having a great struggle getting this point -- and Councilman Ortiz is in the back. I'm having a great struggle getting this point across, and I want to reaffirm that I don't diminish this issue or diminish the importance of pay-to-play, diminish the importance of any sense of corruption in the government, but I do think it's important that in a recently completed election in the presence of a federal investigation and in the presence of considerable campaigning on the issue of pay-to-play that a substantial majority of the people of the City of Philadelphia considering those issues said, I believe this Mayor is 88 11/19/03 - LAW - BILLS 030562, 030710 honest, I believe this Administration is honest and I believe that the priorities that they've set or priorities that support what I believe in a very diverse way. People in every section of this City, as I said a couple of weeks ago on a television program that I do, if you take the Republicans out of the mix of this most recently completed election, almost 50 percent of the white Democrats in the City of Philadelphia voted for Mayor Street's reelection. It is an extraordinarily diverse election result, and I think both people considered these issues doesn't mean they think the world is perfect, doesn't mean they don't want to see change, doesn't mean that they don't put a responsibility on us to be part of that change. But I don't think that they believe that this government makes decisions in a way that is corrupt or is in response to a pay-to-play initiative. We supported, for example, a number of Liberty Property projects that Bill Rause (ph), bless his soul, was a part of. Bill 25 Rause, as we all know, is a guy who never 89 11/19/03 - LAW - BILLS 030562, 030710 contributed to political campaigns, yet he has a number of projects that has been supported by this and other Administrations. And there are a number of other projects around that we support of people who don't give money to this Administration and who are predominately Republican firms. We pick people based on their quality to do the work.

If a poll were taken, "do you believe that there's corruption and cronyism in city government," obviously the vote would be overwhelmingly yes. I haven't seen such a poll. I don't know why somebody doesn't take it. You can't go by the election. Election results, a lot of different facts are being brought together.

Councilman, I'll be very clear, I don't get involved in politics. I'm a public City employee. I will guarantee that if you do a little bit of research, you can find a whole bunch of polls in the City of Philadelphia that ask the question, "Do you believe that this government is corrupt?" I will guarantee you that you can find a lot of 90 11/19/03 - LAW - BILLS 030562, 030710 polls around that ask that question over the last six weeks.

And you would find the yes answer.

And if the answer -- my only response can be if the answer to that question had been overwhelmingly yes, it is my opinion that the outcome of the election would have been different.

Councilman Goode.

Thank you, Mr. Chairman. Two clarifications on the record. One with regard to statements about my bill, it was stated that there is a limit of $2 million for mayoral election and a $200,000 limit on Council election. There is, in fact, a $2 million limit per covered election. And a covered election is a primary, general or special election. So in total there's a $4 million limit on a mayoral limit. There's a 400,000 limit on a Council election, which I believe in both cases is more than enough money to run effective and get a message out. 91 11/19/03 - LAW - BILLS 030562, 030710 The second clarification on the record is, in your testimony you refer to the City Solicitor's opinion on my bill. The City Solicitor said that every single part of my bill was defensible. And that was his characterization of the bill legally. I just want to put that on the record. And lastly, since just of my own personal intrigue as a young legislator going into a second term, do you think that tax reform is able to be accomplished on a local level?

I think that if you look at the performance of the government of the City of Philadelphia, going back as early as Ed Rendell's first term as Mayor that tax reform is being accomplished in the City of Philadelphia and it continues to be accomplished in the City of Philadelphia. The question is, can you change the pace?

So there could be incremental tax reform but not incremental campaign reform?

The ability to achieve 92 11/19/03 - LAW - BILLS 030562, 030710 tax reform in the City of Philadelphia, as we are currently engaged in it, is completely within the power of the elected organization officials of the City. The ability to achieve campaign finance reform as we want to achieve it is not fully within the power of the elected officials in the City of Philadelphia.

So the ability to achieve more comprehensive tax reform over the next term is within the hands of the Mayor and City Council?

Is within the power of the elected officials within the City of Philadelphia.

Thank you.

Councilman Kenney

The Solicitor's Office did indicate that my bill also was defensible. I think some of the amendments that we're offering to cure that, to cure some of the issues of the Solicitor's Office did create that situation. So it is a defensible bill also. So thank you.

Councilman Rizzo. 93 11/19/03 - LAW - BILLS 030562, 030710

Thank you. Mr. Burrell, the professional service contracts within the City of Philadelphia, they're basically no-bid, correct?

I'm being cautious because it really does define how you -- depends upon how you define "professional service contracts," because many of the architectural contracts and engineering contracts are in fact done on a competitive RFP process, they're not low bid processes. Almost the only thing in this government that is done on a no-bid basis is -- except in instances where you can only sole source things -- is for the appointment of legal counsel and the selection of bond teams, underwriters on bond teams and some of the financial advisors on bond teams. That's probably the only place in any significant way no-bid contracts are awarded. And as I said, the underwriters are all subject to Rule G-37, so they can't give more than $250 to local elected officials.

Could you just 94 11/19/03 - LAW - BILLS 030562, 030710 backtrack for a second, explain professional service contract, how that works, how a person gets to do business with the City of Philadelphia? And they refer to it as a personal service -- professional service contract.

In most instances, the City determines when it is going to do a public financing. And in the doing of the public financing, whether that is done directly through the City or through some of the authorities like the Municipal Authority or the Hospitals and Higher Education Authority or the Parking Authority or the Convention Center Authority, usually the Finance Director and the Treasurer will get together and they'll make determinations based on who has the expertise to do the kinds of deals that are going to be done. They will recommend a team. That team will usually consist of a senior underwriter, a couple of co-senior underwriters and two or three or so underwriters who are on the management team, will pick a financial advisor to advise the 95 11/19/03 - LAW - BILLS 030562, 030710 City on it. They'll pick lawyers for the underwriters, and pick lawyers for the City. Almost in every instance there are a combination of both majority firms and minority firms. Those recommendations are then sent to the Mayor's Office and we either confirm them or change them.

Let's talk about something a little bit more basic. Let's talk about Risk Management. Risk Management hires a company that appraises damage that City vehicles create. A Streets Department vehicle hits a parked car, that's a professional service contract. It's, from what I understand, no-bid. Can you explain how a company --

Those contracts are almost always -- and again, I don't want to say always because somebody will come back and say, "I got one where it wasn't." Those contracts are almost always done on a competitive bid process. We will ask a number of providers to say, "This is the service we're looking for, and what is the fee 96 11/19/03 - LAW - BILLS 030562, 030710 for which you would provide it on?" And we'll get three, four, five, depending upon the number of people who will bid on those products. And a determination, a review is made of it, an evaluation is done of it and a determination is made.

How I understand it is it's a lot different than buying a police car. It's not the same process, a professional service contract. There's a lot of latitude to award a professional service contract than buying a commodity.

Councilman, whenever we are letting in a Risk Management contract or any other contract, we're always trying to get the best price for the City of Philadelphia. So we're always going to have -- and trust me, again, it goes back to this system that we talked about. And I'll guarantee you, every one of those people or most of those people have teams of people who have been contributors to political people. And you can't make these selections based upon whether people simply gave you money or 97 11/19/03 - LAW - BILLS 030562, 030710 didn't. They come in with teams, they'll give us their price, they'll tell us what they can do, and we'll select from among that. And almost always, almost always in those instances, and again I'm only limiting it because I'm sure we'll find some exceptions somewhere in the world. But almost always those decisions are made based on the recommendations of the professionals who run those departments. Almost never do those decisions really get changed anywhere else in the government. They're made by people down in the government. That's why I said in my testimony that to suggest that the people who simply want to do a good job in this government and who make decisions and make recommendations on decisions like that are doing it on a political basis is wrong.

But let's be clear for the record. There is a difference between the way a professional service contract is awarded than a bid for a commodity. If we're buying light bulbs or we're buying vehicles, it's a different 98 11/19/03 - LAW - BILLS 030562, 030710 process than a professional service contract. There's more latitude for a person to select a particular vendor under a professional service contract than it is when you're out buying material.

There certainly is more latitude. In a bid contract, everybody who's a qualified bidder can pick up the bid and they can submit a bid and we are bound by selecting the most responsible and responsive bidder. Any company that is qualified to do the work and submits the lowest bid, assuming they satisfy the participation requirements of MBE, disadvantaged, WBE, and others, are qualified to get that bid. In the professional service which are mostly RFP competitive processes, we have the capacity to say, here are the five people who really do this in this community, and go out and say we want you to submit responses to -- whether you call it a bid or a response -- to submit responses to this service that we need to be done. Those five people will respond and then, yes, in that 99 11/19/03 - LAW - BILLS 030562, 030710 instance we are able to spend time looking at the responses and make substantive determinations about this person over here we think have all the skill, for example that we want to do it, and they're 2 percent higher than the those folks over here. There are instances like that where you have absolutely more discretion than in a straight bid situation.

My last question. Not to be labor this. Are those professional service contracts, do they have timelines associated with them, or are they just open-ended?

Most of them are not open-ended. Most of them have timelines. And most of them are for discreet services or a project. There's a project going on and we need that service, because many of those professional services contracts, whether it be -- for example, if we do the trash hauling contracts that we do for the City, they have to come to City Council. If they're beyond the timeline of the one year time limit, those 100 11/19/03 - LAW - BILLS 030562, 030710 contracts, professional service or otherwise, must come to City Council. We don't have the discretion to just give and 10-year 5 contracts to people on a professional service basis.

Well, it's interesting you say that. And I'm going to end. The Procurement process where there's a three-year -- there's a requirement for those contracts to come back to Council, but they don't because they have the option to renew for the next year, so Council never sees it. That's why Councilman Kenney --

Councilman Kenney was right, let's not get into that issue.

But again, there's manipulating the process right there.

I guess there has been forever, not started by this Administration, certainly these contracts that people put in place and say, we're going to have -- we're going to give you a one-year contract with 37 one-year renewable options and try to get around it. I do think we really have tried to 101 11/19/03 - LAW - BILLS 030562, 030710 get out of that business, not get into that business. With the help of Council, I might add.

Thank you. Thank you, Secretary. Thank you, Mr. Chairman.

We can recommend you if any publishing house is looking for a writer of fairy tales. You have my recommendation.

I appreciate, Councilman --

City of Philadelphia purchasing policies.

I lost 50 pounds before I came up here so I'd be almost close to my playing weight. I knew I'd need to be in pretty good shape.

Thank you, Mr. Burrell. No further questions.

Thank you very much.

There are three witnesses left on my list. I'm going to ask all three to come up at the same time. After 102 11/19/03 - LAW - BILLS 030562, 030710 that, if there's any member of the public who has not been heard from who wishes to testify, that will be possible. Lou Coffey, Terry Gillen and Troy Madres. Lou Coffey is from Center City Residents. Terry Gillen is leader of the 30th Ward, Democratic Ward. And Troy Madres is from Young Involved Professionals. So if the three of you will come up. After the testimony, the Committee will be taking a vote on these two bills. I suggest in the interest of chivalry Terry speak first.

Lou can go. Lou's been here longer.

Unless Terry refuses.

I'm going to yield to Lou.

Okay. Lou Coffey. You have to fight for women's rights everywhere, Terry.

Equal rights, 103 11/19/03 - LAW - BILLS 030562, 030710 Councilman Cohen, equal rights.

Equal rights. It's a pleasure to have the three of you here.

Thank you. My name is Louis Coffey. I want to thank Councilman Cohen and members of the Committee on Law and Government for giving me this opportunity to speak with you today on this important issue. I especially want to thank Councilman Nutter who, in response to my letter regarding Bill 13 030562, encouraged me to appear today. Although my wife is going to be a little upset because I was supposed to meet her at 6 o'clock. I'm here in my capacity as President of Center City Residents Association. Unfortunately, neither of the co-chairs of our Legislative Committee, Lenora Berson and Jeanne Wrobleski were able to be here today. So you're stuck with the second team. Because I'm new to this, I ask your understanding, if not your indulgence, if I violate protocols unknown to me. 104 11/19/03 - LAW - BILLS 030562, 030710 CCRA was organized in 1947 to prevent the conversion of Rittenhouse Square into a parking lot. Our mission is to maintain and improve quality of life in Center City. The scope of our activities has broadened since 1947. org. We have more than 1500 members, most of them residents, but a number of them are also businesses, religious and cultural institutions. Many of our resident members are also business or professional people. Our area is bounded by JFK Boulevard, South Street, Broad Street and the Schuylkill River. CCRA strongly supports campaign finance reform. We believe that it is long overdue in Philadelphia, the Commonwealth and the Nation. Bill 0305262 that was introduced on September 11th by Councilpersons Goode and Reynolds-Brown involves the subject of limits on campaign contributions and expenditures. CCRA supports the goal of the bill. 105 11/19/03 - LAW - BILLS 030562, 030710 I'm at a bit of a disadvantage in that both bills have been modified since our Legislative Committee and Board looked at them. Therefore, part of what I may say may be my own opinion and not that of CCRA, if only because CCRA Legislative Committee and Board have not had the opportunity to review the modifications. I'll do my best to distinguish my personal opinions from those of CCRA. I support the mandatory limits on campaign contributions that the bill would impose. Limits on campaign contributions by individuals and entities will substantially advance the democratic process in Philadelphia. I cannot emphasize strongly enough how important contribution limits are to the integrity of the democratic process. CCRA has problems with parts of the bill relating to voluntary campaign expenditures, as it is drafted, though not in concept. The bill provides limitations on campaign expenditures shall be purely voluntary. It is not mandatory and it is not 106 11/19/03 - LAW - BILLS 030562, 030710 required of all candidates. In a recent discussion that I had with Councilman Goode, he advised me that although campaign contributions may be legally capped, mandatory limits on campaign expenditures are unconstitutional, and that accounts for why the bill provides for voluntary limits on campaign expenditures. He advised me that he would prefer mandatory spending caps if they could withstand a constitutional challenge. One problem with the voluntary spending caps in the bill is that once a candidate has voluntarily agreed to impose limits on his or her campaign spending, he or she cannot change his or her mind irrespective of any changed circumstances in the campaign and whether or not the opponent has agreed to spending limits. Under the bill, the City Solicitor's Office can enforce the limitations by obtaining injunctive relief in the Court of Common Pleas even though the opposition candidate is not bound by any similar limitations. Anyone who voluntarily caps 107 11/19/03 - LAW - BILLS 030562, 030710 campaign spending, therefore, assumes the risk that he or she could be outspent by his or her opposition, while he or she is legally bound to keep his or her self-imposed limits. The provisions do not create an even playing field.

Voluntary campaign caps can be detrimental if the opposition is not also bound. The bill provides no incentive or motivation for anyone to agree to curb spending. There is no reason for anyone to agree to campaign spending caps when there are risks of prosecution and a better financed opposition unless they believe that they won't raise enough money to enable them to exceed the spending limits and can gain some public relations advantage from such a unilateral agreement. It is my personal opinion that if the spending limits are to be voluntary, there should be some incentive provided for agreeing to them. On a national level, the incentive for agreeing to voluntary limits has been matching funds. We have seen recently that 108 11/19/03 - LAW - BILLS 030562, 030710 where candidates are confident that they will raise enough money to be able to exceed the spending limits without matching funds, they are foregoing the matching funds and not adhering to spending limits. In those circumstances, the incentive goes away. With the elimination of the incentive, the agreement to limit spending goes away. Whether it is matching funds or something else, there needs to be some incentive to cause candidates to agree to voluntary spending limits. I believe that CCRA would strongly support all parts of Bill 030562 if it were amended to create either enforceable, mandatory spending caps or realize particular incentives for voluntary spending caps. Turning to Bill 030710, CCRA strongly supports Bill 030710 that was introduced on October 30th by Councilman Kenney. We urge Council and the Mayor to adopt it. The bill is a significant step forward in the campaign finance reform 109 11/19/03 - LAW - BILLS 030562, 030710 movement, a movement that unquestionably has been favored throughout the country on the national and local levels. Voters everywhere support the need to eliminate the many negative influences on the political process invited by large campaign contributions. CCRA supports the campaign reform movement as a matter of principle and the elimination of pay-to-play in particular. Pay-to-play is a sport that is not in the public interest. It creates unnecessary pressures on political aspirants and office-holders who want to do the right thing for the electorate but are faced with the realities of the high cost of financing modern political campaigns. For the aspiring or elected office-holder to do good, he or she needs to get elected. To get elected, he or she needs to run a well-financed campaign. Until we limit campaign contributions and spending, we are putting our best and brightest and most principled in temptation's way. We have read reports in the media 110 11/19/03 - LAW - BILLS 030562, 030710 from those whose careers are spent studying such matters on a national scale that Philadelphia and Pennsylvania has taken pay-to-play to hither to unknown extremes. They were not being complimentary. More specifically, here in Philadelphia during many Administrations, there has been a perception that favored City contracts are and were awarded as a matter of course only to large contributors in political campaigns. Even if, in actuality, there is no 13 pay-to-play or quid pro quo, the appearance of impropriety alone has an adverse impact. The elimination of an even playing field for obtaining City contracts is demoralizing and dissuades less affluent individuals and businesses from applying for City work. The City loses the benefits that are obtained from real competitive bidding for City work. Pay-to-play has a material adverse impact on residing and doing business in the City. Yesterday, the Tax Reform Commission delivered its report and recommendations for reducing and restructuring City taxes. The 111 11/19/03 - LAW - BILLS 030562, 030710 Commissioners concluded that the City taxes adversely impact residents and businesses, erodes our tax base and reduces tax revenues, creating a need to impose a greater tax burden on those who remain.

The pay part of pay-to-play has some similarities to a tax. It is an additional cost of doing business in the City where the taxes already make the City uncompetitive. The pay portion is, however, unlike a tax in two important ways. First, if you have the permits and approvals needed, operate a legitimate business and pay your taxes, you can operate in the City. With pay-to-play, paying does not guarantee that you can play. We have read the story of a Northeast car dealer who paid heavily but was not able to play until a court, at the end of a brutal and costly court battle, ordered the City to issue the permits that the car dealer was entitled to as a matter of right under the law. The car dealer was a multi-millionaire who was tenacious and could afford to pay and, when he was not allowed to play, could afford 112 11/19/03 - LAW - BILLS 030562, 030710 to finance the costly court battle to get that to which he was entitled without having to pay. But what about our average small business person who can neither afford to pay-to-play nor to finance the court battle to get that to which he or she is entitled? It is a barrier to doing business. The second way in which pay-to-play differs from a tax is that tax revenues go into the public treasury and are presumably used for the public good. The pay in pay-to-play does not go into the public treasury. It goes to a few individuals who use their public office or influence with those in public office for their own purposes by steering public assets to those who pay. They use Public Property for their own private gain. You might ask why a residents' association cares so much about business. As I mentioned earlier, a number of our members are businesses and many of our individual members are business and professional people 113 11/19/03 - LAW - BILLS 030562, 030710 who are directly affected by the barriers to doing business that pay-to-play imposes. But purely as residents, if business is discouraged, the variety and quality of merchants and service providers who offer the goods and services that make up the quality of life in Center City is diminished. Businesses leave or choose not to locate here. Property values are impacted, and the tax burden on those who remain is increased. It is not surprising that elected officials want those on their staff, those closest to them, to be their loyal supporters and not those who would want to bring them down. I have no problem with that. However, when awarding public contracts or public assistance or otherwise dealing with public assets, public office-holders have a duty to deal with people on the basis of merit. Where pay-to-play is a legal sporting event, even the most virtuous among us, and we all have weaknesses and blind spots, may have difficulty distinguishing between the public good and personal gain. We 114 11/19/03 - LAW - BILLS 030562, 030710 need to remove that pressure and confusion from our aspiring and elected officials so that they can focus on advancing the public good. I commit to you that I will do my best to get CCRA's more than 1500 members behind your campaign of finance reform initiatives. If there are things that CCRA can do to be supportive, please let us know. If you would like to address our members on this issue at a public forum, I will work with you on arranging such an event. Thank you.

Thank you very much, Mr. Coffey. Any questions from members? (No response.)

It's a very thoughtful statement. Terry Gillen.

Thank you, Members. In the interest of the time, I'll be very brief. And I want to say that I am testifying in support of the bill that limits contributions from people who do contracts with the City. 115 11/19/03 - LAW - BILLS 030562, 030710 I'm also testifying on behalf of the campaign finance bill introduced by Councilman Goode. I do want to say that I think the bill would be strengthened with maybe three things. I want to urge Council to consider this. One is that it, in my opinion, ought to apply to all City officials not just Council and the Mayor. It ought to apply to the row offices as well. And I think the broader we can make the bill, the better. The second is that if there's a way to limit spending on campaigns by related packs or state packs, we need to do that. This is obviously the problem that's been at the national level with soft money. People figure out another way to get around limits. And if we don't have state campaign finance reform -- which we don't right now. A number of us are working on that to change that, but in the meantime, I think it's important that we really look and see if there's a way we can limit spending by related packs. And finally, I want to say the enforcement mechanisms, I think, need to be 116 11/19/03 - LAW - BILLS 030562, 030710 strengthened, because what's especially troubling in the City of Philadelphia is that we don't get enforcement of a lot of local election laws by the District Attorney who often recuses herself because she says if she knows the person, she should not be in the enforcement business. That leaves a real hole in the enforcement of a lot of election violations, in my opinion. And I think the reform board that was proposed by the League of Women Voters is a good first step. But if we don't have some serious teeth in this with some serious penalties, and frankly people have the possibility of going to jail if they commit violations, then I think we are really just kidding ourselves. So I would urge you to make any changes that you can. If you can't make these changes, to look at this as a first step and to not say that you've done your work and that you're finished, but that this is just a first step in a longer process. Thank you.

Thank you very much. 117 11/19/03 - LAW - BILLS 030562, 030710 Any questions? (No response.)

Seeing none, Mr. Madres.

Thank you. I just would like to thank everyone at Council. I know it's been along night and I really thank you for allowing Young Involved Philadelphia to speak. My name is Troy Madres, and I'm speaking on behalf of Young Involved Philadelphia in support of both bills that Councilman Kenney and Councilman Goode are introducing. We feel that passage of this bill is essential to showing all Philadelphians that Council is serious about campaign finance reform and willing to take steps against the practice of pay-to-play. I'm co-founder and board member of Young Involved Philadelphia, otherwise known as YIP. YIP was founded in fall of 2003 as a civil engagement organization for young Philadelphians to meet, discuss important issues pertaining to the City, and to advocate 118 11/19/03 - LAW - BILLS 030562, 030710 on good government reforms. We have a membership base of over 600 Philadelphians who regularly attend our meetings, participate in many of our activities and receive our newsletter. Our organization is based on two visions. First, we aim to educate Philadelphians about local civic affairs and key issues facing the City. We've held forums on the State's planned take over of the School District, planning efforts and revitalize neighborhoods, the future of the Sam Eric Theater, and immigration, to name a few. Even several members of the Chamber, including Councilman Nutter and Kenny have come to speak to our group. Our second vision is to support reforms that help create a better Philadelphia. We've participated in several advocacy campaigns since our inception, most notably, the effort to continue cuts to the City wage tax; and more recently, support for balance solution in Love Park. A third issue that we have monitored 119 11/19/03 - LAW - BILLS 030562, 030710 and supported has been campaign finance reform. The bill that both Councilmember Kenney and Goode is introducing represents a viable step for reform in the City and shows that the City is willing to end its system of pay-to-play, which is significant for young adults like myself. You might ask why young people would care about a bill like this. You might think that education reform or better access to job training would be a more immediate. And while they're extremely important, this bill 14 addresses an issue that is at the core of many residents' dissatisfaction with the City, the notion that money gives you the keys to doing business in the City, that effort and determination is second to the connections that special interest receives, and that the public interest is held in low regard to campaign contributions. YIP supports this bill because ending pay-to-play would incur a change in the perception of City Hall to Philadelphians. We feel the appearance of pay-to-play as to the 120 11/19/03 - LAW - BILLS 030562, 030710 sense of corruption in the City makes them feel more jaded, that the City does more to represent the interest of businesses than its citizens and leads to apathy to precisely the same group of people who the City should want to culture as future leaders. There's a growing sense to many Philadelphians, as highlighted in our recent election and federal investigation, that corruption is extensive in City Hall. As outlined in an article in today's Inquirer, contributors who gave large donations to the Mayor's campaign also receive City business and taxpayer money. One has to ask if these contributors receive the work because of their proposals and experience and hard work or because certain politicians receive their money. Even if that is not the case and a transparent selection process govern and a firm is chosen, the entire process is still tainted. The appearance of corruption is just as harmful in creating cynicism and skepticism in the City's residents.

The two bills that Councilmember 121 11/19/03 - LAW - BILLS 030562, 030710 Kenney and Goode are proposing would begin to erode that perception and give the impression to the citizens of this community and elsewhere that the City plays fair and bases its business decisions on factors of skill and experience. Many young Philadelphians also feel jaded that the City does not represent them. They draw a straight line from the contributions a firm makes to the special treatment and business it receives from the City, and it makes them ask about their interests and concerns. What does it take for government to listen to me; a well-written letter, a visit to the office, a protest, or does it take a campaign contribution? The Mayor once stated that people supported himself in the general election have a greater chance of getting business from his Administration than those who supported his opponent. I believe that when young people read a quote like this and follow the trail of money, they feel warn down that their best effort will always be dwarfed by big business 122 11/19/03 - LAW - BILLS 030562, 030710 and its extensive financial resources. What's the point of any effort if the City caters to special interests and not to me? Last, the appearance of pay-to-play creates apathy in young people and other Philadelphians as well. Campaign contributions represents an additional cost of doing business, creating another disincentive to young people who are already saddled with high taxes, cheaper alternatives across the river and the county line, and 50 years of economic decline. It leaves to young people who don't want to be civically engaged. Through their silence, the current system is allowed to continue. At its best, it creates citizens who aren't motivated to make change in the City and at its worst, makes the ones who can afford to leave go to places like New York, Chicago, Los Angeles or even Montgomery County. And guess what? Those three cities I mentioned ended pay-to-play long ago and have also enacted progressive and modern campaign finance reform. Philadelphia needs to culture and 123 11/19/03 - LAW - BILLS 030562, 030710 promote its young leaders. They're its future, and we can't let them go because they simply don't care about the City. Passing this bill and others will set a good example to our youth and encourage their future involvement and interaction with the City. As young leaders, many of us want to be in politics and we hope our good ideas and hard work will make it happen and not simply the amount of money that we can raise. Cities like Philadelphia are endowed with many positive attributes. It's a cosmopolitan environment. There's a high concentration of higher education centers. There's incredible museums and cultural offerings and the unique feel that only a place like Philadelphia can provide. But adding these positive attributes are expensive or impossible. Lake Tahoe is never going to be two hours away, and we don't have the millions to build another stadium or another Kimmel Center. But the City can remove its negative attributes. It can reduce taxes, it can help lower the cost of construction, and 124 11/19/03 - LAW - BILLS 030562, 030710 it can enact serious campaign finance reform. Passing Councilmember Kenney's bill 4 and Councilmember Goode's bill will be the first step to reduce the sense of corruption and attachment citizens feel about the City, make people feel that their elective politicians truly represent them and engender a sense of civic participation amongst all citizens, including and especially its youth. This is certainly an attribute that the City will want to remove, and I hope Council realizes this and makes a correct decision. Thank you.

Thank you all also for a very thoughtful statement. Are there any questions? (No response.)

Hearing none, thank you very much. The last speaker on my list is Lance Haver, Director of Consumer Affairs.

Thank you very much, and I'll be very brief because I appreciate all the time that you've spent. 125 11/19/03 - LAW - BILLS 030562, 030710 Good evening, my name is Lance Haver. I'm the Director of the Office of Consumer Affairs. I want to be clear and I guess you already know that I'm not testifying on behalf of the Street Administration which created the independent Consumer Affairs Office. It is that independence that allows me to provide what may be a different perspective than the Mayor's. I am very thankful that City Council is taking up the critical issue of campaign finance reform because we need campaign finance reform. All too often our elections are turned into auctions with the office going to the highest bidders. The sanctity of the democratic process is placed at risk when rank and file voters believe that elected officials answer first to the contributors and second to the people. I don't believe that these two bills go far enough. Inadvertently, we have created a system that tars everyone in the election process. The candidates are forced to raise money to be credible, and then accused of 126 11/19/03 - LAW - BILLS 030562, 030710 selling their office. The contributors who are on the one hand are urged to be civic minded, on the other are accused of trying to buy favor. Voters are told ever vote counts, but led to believe by the federal government, no less, that those that give are more important than those that vote. The problem is the current system, it forces all of us into an untenable dance. It cost $12 million to run for the Mayor's office. A candidate must raise millions to be seen by the media as credible. If a candidate is not seen as credible because they have not raised enough money, they don't get covered. Without coverage, there's no hope of a candidate winning. In much the way that bank robbers rob banks because that is where the money is, candidates are forced to try and raise money from the wealthy because that is who has the money to give. It should be no 22 surprise to anyone that the wealthy have business interests in the City and from time to time do business with the City. I realize that the idea such as 127 11/19/03 - LAW - BILLS 030562, 030710 limiting contributions and making it illegal for people to give to businesses with the City of Philadelphia are tempting. Unfortunately, our past experience with national campaign finance laws show that nothing short of public finance of elections will end the need for people running for office to also run for money. Limiting campaign contributions will simply make prodigious fund-raisers more important. Creative lawyers will find ways around whatever rules are established, in much the way that big donors find ways around the federal laws by using soft money to buy national elections. Yes, the ideas are lofty, but the devil and the details of anything short of public funding is too large to defeat. We have had 30 years of experience with the quote/unquote post-Watergate campaign reforms. I do not believe that any rational person can say that big donors are no longer important, despite limits placed on campaign contributions. It doesn't make sense to me to 128 11/19/03 - LAW - BILLS 030562, 030710 try and implement a system that has not worked in the past with the hope that it will work in the future. The only way to make voters more important than contributors is to have campaigns publicly funded. Thank you.

Thank you very much. Any questions? (No response.)

If not, is there anybody who has not been called who wishes to be heard? I'm not inviting testimony, but we're willing to have it. (No response.)

Seeing no one, the Chair declares the public hearing at the end and calls for the beginning of the meeting of the City Council Law and Government Committee. - - - - 129 COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC MEETING COMMITTEE ON LAW AND GOVERNMENT - - - - Wednesday, December 11, 2003 - - - - Public meeting conducted by the Committee on Law and Government, held in Room 11 696, City Hall, Philadelphia, Pennsylvania, on the above date, to consider action on the following: BILLS 030562, 030710. PRESENT: COUNCILMAN DAVID COHEN, Chair COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN W. WILSON GOODE COUNCILMAN JAMES KENNEY COUNCILMAN MICHAEL NUTTER COUNCILMAN ANGEL ORTIZ COUNCILMAN FRANK RIZZO 130 11/19/03 - LAW - PUBLIC MEETING

First order of business should be the introduction by Councilmembers Goode and Kenney of the amendments they offered at the hearing. Do I hear such a motion of Councilman Goode?

Thank you, Mr. Chairman. I move that the amendments, as circulated, on Bill 030562 and discussed on the record be approved. (Duly seconded.)

Any discussion? (No response.)

If not, all in favor of that motion, please say aye. (Aye.)

Any opposed? (No response.)

The ayes have it. The amendment is adopted. Councilman Kenney, do you have with respect to your bill --

I'm not on the Committee. Perhaps Councilmember Goode ought to make a motion to approve his amended bill. 131 11/19/03 - LAW - PUBLIC MEETING Councilman Nutter will be handling my amendments.

Are you prepared to make a motion to approve the bill, as amended.

Thank you, Mr. Chairman. I move that Bill 030562, as amended, be reported out of Committee with a favorable recommendation, and a further recommendation that the Rules of Council be suspended to allow first reading at our next Council Session. (Duly seconded.)

Any discussion? (No response.)

If not --

Mr. Chairman, I'm voting nay on the amendment and on the bill. I'm voting nay on the second bill.

On the amendments and on the motion, okay. All those in favor please say aye. (Aye.) 132 11/19/03 - LAW - PUBLIC MEETING

Any nays?

I'm voting no on the second bill. I'm voting yes on Councilman Goode's bill and I'm voting no on the second bill.

Councilman Mariano left his vote. He's voting aye on Councilman Goode's amendments and on the bill.

All those in favor of the motion of Councilman Goode to support his bill, please say aye. (Aye.)

Any opposed? (No response.)

It's unanimous on Councilman Goode's bill. Now, Councilman Kenney's bill.

Mr. Chairman, I'm going to offer the amendments for Councilman Kenney on this particular bill. He's not a member of the Committee. The amendments have been circulated and I would move the adoption of the amendments to Bill 030710. 133 11/19/03 - LAW - PUBLIC MEETING (Duly seconded.)

All those in favor, please say aye? (Aye.)

Any nays?

Nay.

One nay, Councilwoman Blackwell.

Councilman Mariano left his vote as a no also.

And Councilman Mariano. The amendment is adopted. Councilman Nutter, will you offer the final motion?

Mr. Chairman, I move that Bill 030710, as amended, be reported out of this Committee with favorable recommendation, a further recommendation that the Rules of Council be suspended so as to permit first reading at our next session. (Duly seconded.)

Any discussion? (No response.) 134 11/19/03 - LAW - PUBLIC MEETING

If not, all those in favor, please say aye. (Aye.)

Those against will say nay.

Nay.

Councilwoman Blackwell and Councilman Mariano. The bill as amended is adopted. The public meeting is at the end. I thank everybody for their patience, the witnesses the Members of Council, and I'll even thank the Chairman. (Council adjourned at 9:00 p.m.) 135 C E R T I F I C A T I O N I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Wednesday, November 11, 2003, were reported fully and accurately by me, and that this is a correct transcript of the same. RE: COMMITTEE ON LAW AND GOVERNMENT _________________________ Lisa C. Bradley, RPR